Why bad policy can be good politics

Why would the Gillard government want to cut an unambiguously popular area of government spending - medical research? Because, perversely, it may be good politics.

The Prime Minister has promised to bring the budget back into surplus as quickly as possible. There is considerable political pressure on her to do so, and (as far as the budget deficit accords with a general perception of her government as hopelessly wasteful) considerable public pressure as well.

So the government needs to talk about tough choices. And nothing demonstrates toughness than cutting medical research.

The government is apparently considering slicing $400 million off the National Health and Medical Research Council. The Council looks at things like cancer treatment, trauma psychology, child allergies, cot-death, and genetic heart defects. It’s a pretty sympathetic Commonwealth body.

So if the rumours are true, the government is playing a familiar game. When cutting against your wishes, cut in the most painful place. Government bureaucracies do this all the time. Bureaucrats have a powerful incentive to make budget cuts hard for their political masters.

When in 2008 the Rudd government insisted the Australian Bureau of Statistics take a haircut of $20 million, the ABS’s immediate response was slice into two of its most necessary statistical functions – retail sales data and labour force numbers. The ABS couldn’t have picked more painful and sensitive things. If those figures aren’t reliable, then, for instance, the Reserve Bank would struggle to do its job at all.

Next the public sector union claimed that the census would be next on the chopping block; that the budget reductions meant the 2011 census would have to be exactly the same as the 2006 census, instead of being updated. Welfare agencies cut things like taxi trips for children with disabilities. Education departments close schools, instead of reducing the blossoming ranks of administrators, the paper-shufflers, and the lavish consultancies to friendly specialists in academia. School closures do not play well in the press.

In 2009, Hawaii’s education department was told to make savings. Instead of cutting jobs, it cancelled school on Fridays. Similarly, Julia Gillard and Wayne Swan have an incentive to make deficit reduction look as tough as possible.

To paraphrase American journalist and satirist HL Mencken, if the public wants cuts in government spending, they’re going to get them good and hard. And the louder the research community complains, the tougher the government looks.

The government has been accused of wasteful spending at every opportunity. Tony Abbott has made “the BER” and “pink batts” into all-purpose symbols of fiscal recklessness. So Julia Gillard probably welcomes the thought of having taxpayer-funded researchers rally across the country to protest her austerity measures.

There’s a very good chance the medical research cuts won’t be made. If the government follows this well-thumbed script, it will back down - “saving” research while simultaneously demonstrating an eagerness to make tough budget calls.

Still, the research cuts put Tony Abbott in a spot. The opposition leader prides himself on clarity of message. When opposing a government that cannot shake the impression of hopelessness, simplicity works. Cutting the debt was point one of the Coalition’s “Action Contract” in June last year. Ending the waste was point two.

Yet Abbott gets into trouble when he tries to fill in the detail of what, specifically, he would like to cut to bring the budget back to surplus Every government program has a vocal constituency certain that their funding is the difference between refined, advanced civilisation and a brutish Hobbesian state of nature.

Now he’s found himself opposing a reduction in government expenditure. The Coalition’s health spokesman, Peter Dutton, said over the weekend that “The Coalition is going to the barricades over this one. We won't stand for hundreds of millions being ripped from research.” It muddies the Coalition’s otherwise simple and clear message about reducing spending – a side-effect which wouldn’t disappoint the government at all.

Of course, just because strategic budget cuts might be good politics don’t mean they’re good policy. The medical research community is quite upset. Yet its reaction does raise the question of whether there is such thing as an optimal amount of funds directed towards medical research.

Is all medical research spending the most efficient research spending? Or can funds only ever increase? Do we have the right mix of private and public? Are the incentives for private firms to develop new treatments the best they can be?

Or is it uncouth to ever ask such impertinent questions? Perhaps so.

Yet our deep reluctance to ask them is why these sorts of cuts are more politically clever than they first appear. The government wants to look tough on spending. And nothing’s tougher than cutting the development of new cancer treatments.

Chris Berg is a Research Fellow with the Institute of Public Affairs. Follow him on Twitter